Mothercare goes into administration

Maternity and children's retailer Mothercare Australia has gone into administration after the Myer family pulled the pin on a deal to buy the business.

Mothercare Australia said Myer Family Company Holdings had terminated an agreement, made late last year, to acquire the retailer for about $6 million.

Myer pulled out because some conditions were not fulfilled or waived.

Mothercare has appointed Brian Silvia and Antony Resnick of BRI Ferrier as administrators.

"The voluntary administrators are conducting an urgent assessment of the financial affairs of the companies and trading will continue at this time," Mothercare said in a statement.

As part of the proposed sale, Myer had agreed to provide $500,000 to Mothercare for use as short-term working capital after the retailer earlier said it would need to raise capital to maintain its Australian operations.

However, during the due diligence phase in December Mothercare flagged that the deal may not go ahead.

Mothercare Australia said the company had now been forced to enter into administration and the board had appointed BRI Ferrier as its administrator.

The company increased its revenues for 2011/12 by 21 per cent but recorded an underlying pre-tax loss of $10.9 million.

Mothercare said the loss was a result of restructuring and redundancy costs, an asset write-down and costs relating to the return of stock to suppliers.

It also said it had been affected by tough trading conditions in Australia due to weak consumer demand and price wars with its rivals.

Mothercare has 28 stores in NSW, Queensland, Victoria and Western Australia.

Mothercare Australia, whose parent company Mothercare Plc is based in Britain, operates Skansen, Baby on a Budget and DoDo Holdings.

Its three Australian brands are Kids Central stores, Early Learning Centre toys, and Mothercare stores.

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